BDO’s Healthcare Rx Newsletter: Future of Healthcare Lies in the Data

Healthcare looks dramatically different than it did two years ago. It’s moving from a system of mandates to choice, regulation to competition, and subsidies to actuarial soundness. At the same time, the five revolutionary forces we’ve seen take the industry by storm—including the growth of mobile technologies and the convergence of molecular and computer coding—are picking up speed.

Under these lenses, data has become the most valuable resource in healthcare. Tech giants like Amazon and Google are no longer just circling healthcare—they’ve entered it. The never-ending spate of M&A and partnership activity is proof that the days of traditional healthcare business models are numbered.

In our revamped newsletter, BDO’s Healthcare Rx, we look at how these variables are changing healthcare, and where future opportunities may lie. One clue? Start by looking at Medicare Advantage.

Happy reading!

BDO Knows:

Latest insights from The BDO Center for Healthcare Excellence & Innovation and around the firm

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Prescribed Reading:

BDO’s Quick Take: Medicare Advantage (MA), a private-sector solution, has accomplished what in many ways the public sector has struggled to do: cut healthcare costs while improving the quality of care. CMS has already shown support for MA plans. In its latest budget, Congress expanded the purview of MA. As the government pushes more people into MA to control healthcare spending, the move to value-based care will speed up. In an MA world, hospitals will have to refocus the quality of their service offerings to remain financially viable.

BDO’s Quick Take: Hospitals are disappearing as the five revolutionary forces take hold. The advancement of treatment modalities through science and new care protocols is moving much of the care historically provided in hospitals to non-hospital settings. As mobile technologies continue to become more advanced and the healthcare supply chain consolidates further, this trend will only quicken.

BDO’s Quick Take: Regulators are intensifying the spotlight on cybersecurity for good reason. We estimate that the cost of cybercrime could reach $2.1 trillion globally by 2019. Three risk mitigation steps are crucial: implementing a risk-based, threat-driven patch management program, putting in place continuous threat monitoring and analytics tools, and introducing an employee training program.

The Center Weighs In…

On why the frenzy of healthcare M&A is all about data:

Data-rich Facebook and Google make their money on advertising—a business worth $200 billion. “Healthcare is 15 times bigger than that. We spend $3 trillion. In theory, if this is done right, you’ll have 15 Facebooks and 15 Googles. That’s what’s up for grabs.” – Dr. David Friend tells Fortune Magazine

“[The Cigna-Express Scripts deal] is another example of how the battle for data is driving disruption in healthcare. For example, if Cigna or another insurer knows a patient is on a more expensive drug and can switch that patient to a cheaper version, the insurer can save a lot of money—and the consumer could too.” – Dr. David Friend tells Fortune Brainstorm Health

On the Amazoning of healthcare:

“The supply chain in healthcare is really now up for grabs. I think it’s pretty clear that Amazon is going to get into this business if you look at the deal now with JPMorgan and Berkshire Hathaway. They are a great master of disrupting the supply chain.” – Dr. David Friend tells CNBC Nightly Business Report

“My advice to healthcare boardrooms is to take a very serious look at how things are changing around you. You cannot sit there and expect business as usual. They’re pouring gasoline on the fire, so you better do something.” – Dr. David Friend tells HealthLeaders

about the author

Steven Shill’s experience spans 15 years in public accounting and another five years as a senior financial manager with a publicly traded corporation overseas. Steven’s clients have included both public and privately held companies within the healthcare, finance, mortgage banking, manufacturing & distribution and high technology. read full bio